Retail health clinics (and many of their “corporate” counterparts inside large organizations) typically diagnose and treat simple acute conditions, such as strep throat, bronchitis, minor wounds, rashes, or infections. Many offer a range of wellness services, such as sports physicals and smoking cessation programs, while some also offer routine vaccinations for flu,pneumonia, and other fairly common conditions. Most recently, retail clinics have started expanding into dental, optical, and hearing services. As a general rule, retail health clinics provide basic health care and do not treat urgent, traumatic injuries or illnesses.
Clearly, convenience and cost-effectiveness are the major factors that have led to the significant growth of retail clinics (and supported the increase in corporate clinics over an even longer period). Most retail and corporate health clinics offer services on a walk-in basis, and many have extended hours to accommodate patients’ work schedules. Not only is it typically easier and more efficient to walk in to a clinic located inside a local store/pharmacy or workplace, if it has one, than it is to get to an urgent care center, it is also less costly. The lower cost of care is due in part to the fact that retail clinics are typically staffed by nurse practitioners and other non-physician medical providers. These individuals are paid less than physicians and so retail clinics tend to receive lower reimbursement rates from third-party payers.
1) Getting the Pricing Right
While corporate clinics are essentially free to employees (and are typically a win-win for both employee and employer), retail clinics can readily undercut both medical practitioners and hospitals (often in both total cost and co-pay terms). In most of these businesses customers like the convenience and proximity (its in the same store where they are shopping) but are looking for generally lower prices. As such, retail clinics need to pitch their prices carefully enough to both draw in customers (and keep them). This is a surprisingly difficult and an ever-moving target as competitors look to fight back.
2) Broadening the Customer Base
Although casual or “drop in” customers continue to use retail clinics for the first time, there is considerable scope to both reach many more of the attainable customers (in store or living close by) and to retain them for multiple services over time (and not just get an annual flu shot). This typically means that both the retail and corporate clinic has to individually market its services more aggressively and on a targeted basis. In addition, it means encouraging existing customers/patients to enjoying the experience and then tellfriends and colleagues to share that experience. These new customers obviously add greatly to overall revenues and reputation of these clinics as a quality alternative to the local doctor or hospital.
3) Reduce cost and waste:In general, a retail clinic that is located in an low overhead environment close to its customers will steal business away from its higher overhead competitors if they get their pricing right (lower than competition but enough to make a reasonable profit). However, these clinics must also ensure that cost and waste at all levels is reduced and kept low so that they maintain good margins on every procedure they perform or drug they administer. This takes good process design at all levels and continual vigilance.
4) The volume to value-based care:
The move from volume to value-based reimbursement has been a much-discussed topic across healthcare and it is arguably how retail clinics have been set up at business model level. In other words, the core message of these businesses is that customers can get provable value by using the retail clinic services (at least in the limited range of ways services are offered). The challenge though is to get enough customers to appreciate this and realize that the quality of service is equivalent or better than elsewhere.
5) Fully leveraging the Affordable Care Act (ACA):Although it has little impact on corporate medical clinics, the ACA emphasizes several core concepts in future healthcare practices, including greater use of online tools, more preventive care, increased transparency, and more accountable care. Retail clinics are naturally in a great position to demonstrate all of these requirements and this is why they are expected to have more than 20 million customers by 2020 in the US. However, retail clinics can’t replace the physician’s office or the emergency room for in many circumstances and consequently still have to work hard to use the Affordable Care act changes to gain strategic advantages.
Retail clinics need to gain further credibility with customers, build their process efficiency and effectiveness and get more customers to switch from using medical practices and hospitals for the treatments they offer. RX4 has experienced all of these challenges in many different retail and corporate clinic environments and can provide considerable insight and options where the knowledge is limited or does not exist internally.
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CEO-RX4 Group-Taking Care of the Business of Healthcare